The company links the decision to cut staff with a sharp drop in revenue.
Brian Armstrong, the head of Coinbase, announced Tuesday that his exchange would separate 950 of his employees. This is the second time in 6 months that the American crypto exchange has carried out a large wave of layoffs. This proves that the exchange is greatly affected by the bear market context.
Furthermore, Armstrong confirmed that Coinbase will be abandoning several projects. The company will spend up to $68 million to pay severance payments to laid-off employees, he said.
By the end of Q1 2023, Coinbase plans to complete the transition to a new, more efficient business model.
Mass Revocation on Coinbase
The outright effects of the crypto winter continue to affect the industry. After Huobi, Coinbase has just announced that it will reduce part of its workforce to limit the company’s operating costs. The American stock market will lay off no less than 950 people, or almost 20% of its workforce. The cryptocurrency company expects to reduce costs by approximately 25%.
In fact, this is not the first time that the American crypto platform has carried out this wave of layoffs. In June, the company had already laid off 18% of its workforce. So, just like with Huobi, the crypto sphere has quite a few questions about the financial health of the exchange.
In an article on the Coinbase blog, the head of the company, Brian Armstrong, provided an update on the situation. Addressing concerns about the company’s financial stability, he said that Coinbase is well-capitalized and that recent events in the industry will benefit its platform.
“Coinbase is well capitalized and cryptocurrencies are not going away. In fact, I believe that recent events will ultimately benefit Coinbase greatly (large competitor bankruptcy, emerging regulatory clarity, etc.) and validate our long-term strategy,” Armstrong wrote.
A Catastrophic Record
As Q4 results are pending, Q3 results showed that Coinbase revenue was down 50% year-over-year. Unlike 2021, when the company’s finances were in the green during this period, in the third quarter of 2022 the swap shows a net loss of $545 million.
“Trading income was significantly impacted by strong macro and crypto market headwinds, as well as trading volume offshoring,” the firm had written in a note to its investors.
The evolution of the market value of its share, COIN, has risen more concern. Its price has fallen 87.39% from its peak of $342.98 in November 2021. In addition, it should be noted that despite COIN’s dizzying fall, the investment fund dedicated to technology shares, Ark Investment, continued to bet on action
In December, Ark bought Coinbase shares for $11.9 million. Recently, on January 4th, Cathie Wood, a senior director at Ark Investment, revealed that the company acquired $5.3 million worth of Coinbase shares.
By Audy Castaneda
